Posted by on 16 February 2011 | 0 Comments

The Government’s vehicle scrappage scheme is up and running and most people are aware of the opportunity to cash in on a £2000 discount when trading in a car aged 10 years or more for a new one.

 You may not be aware that your business or company can claim in exactly the same way. No distinction has been made between commercial or private buyers, it is the registered keeper (whether an individual, partnership or limited company) who is eligible to apply. The scheme also applies to vans (up to 3500kg in weight) and there is no limit to the number of vehicles that can be purchased per individual or business.

The scheme can be used to achieve a very tax efficient investment. The part exchange of a qualifying ‘old’ van or car for a new van could achieve the scheme discount of £2000 on the price; a full repayment of Vat incurred and enhanced tax allowances of up to 100%. In addition HMRC have confirmed to us that the scrapped vehicle will be treated in tax terms as being disposed for £nil as opposed to £2000, therefore no tax charge arises on the ‘scrappage’ of the old vehicle.

What’s the catch?

Apart from the obvious cost of investing in a new vehicle there are conditions as follows:

Your old vehicle must: 

·        Be a car or van weighing up to 3,500 kilograms;

·        Have been registered in the United Kingdom on or before 31 August 1999

·        Be registered with the DVLA in your name;

·        Have been under your ownership continuously for the past 12 calendar months;

·        Have a current MOT

·        Be clear of any financial arrangements.

Your new vehicle must:

·        Be a car or van weighing up to 3,500 kilograms;

·        Be first registered in the United Kingdom on or after mid May 2009;

·        Be declared new at first registration in the United Kingdom with no former keepers; 

Funds are limited to £300m for the scheme. It will end the sooner of 28 February 2010 or when these funds are exhausted. The Scrappage Scheme is voluntary for manufacturers and dealers.  If the manufacturer enrolls on the scheme it will apply to all the manufacturer’s models and not just selected ones.Please contact us to obtain advice specific to your circumstances.